MNI US OPEN - Takaichi Takes Top Spot in LDP Polling

EXECUTIVE SUMMARY

• US, JAPAN AGREE ON CLOSE CONTACT ON FX, POLICY
• BESSENT TO TALK TRADE, TIKTOK WITH CHINESE OFFICIALS IN MADRID
• TAKAICHI RUNNING FOR LDP CHIEF, LEADS IN PARTY LEADERSHIP POLLING
• UK MONTHLY GDP BROADLY IN LINE; WEAK MANUFACTURING BALANCED BY SERVICES

Figure 1: UK three monthly GDP growth slowed for the third consecutive period in July 2025

Source: ONS

NEWS

US/JAPAN (MNI): US, Japan Agree on Close Contact on FX, Policy

Japan’s Ministry of Finance and the U.S. Treasury said Friday they will continue close consultations on macroeconomic and foreign exchange issues, according to a joint statement released by the MOF. They reaffirmed that exchange rates should be market determined and warned that excess volatility and disorderly moves could threaten economic and financial stability. The two sides also reconfirmed the G7 pledge that fiscal and monetary policies will be directed at domestic objectives using domestic tools, and not at targeting exchange rates for competitive purposes.

ECB (MNI): ECB's Villeroy Says Cut at Coming Meets Totally Possible

It is "totally possible" that the ECB will cut rates at one of its upcoming policy meetings, Bank of France Governor Francois Villeroy told BFM Business TV Friday. The BdF chief said that markets had slightly overinterpreted the term 'restrictive' in their reactions to the ECB's statement Thursday following the latest Governing Council meeting.

POLAND/RUSSIA (BBG): Poland’s Tusk Says ‘Drone Attack’ Wasn’t A Mistake

Poland’s Prime Minister Donald Tusk said the “drone attack” by Russia that happened earlier this week wasn’t a “mistake.” “We would also wish that the drone attack on Poland was a mistake. But it wasn’t. And we know it,” Tusk said in a post on X, a few hours after President Donald Trump told reporters the incursion could have been a “mistake.”

CHINA (MNI): China Fiscal Policy Has Ample Room - MOF's Lan

MNI (Beijing) China’s fiscal policy has ample room to expand while keeping risks in check, Finance Minister Lan Foan told reporters on Friday, adding that a key focus will be on strengthening coordination between fiscal and monetary policy. Long-term trends remain positive, while mechanisms for risk prevention are improving and existing risks are being gradually absorbed, said Lan, noting how over the past four years, China’s economy has grown at an average 5.5%, contributing about 30% to global growth.

BOJ (MNI EXCLUSIVE): Tankan Key for Gauging Wage Growth; BOJ Cautious

MNI looks at Japanese wage growth and the BOJ's interest-rate strategy. On MNI Policy MainWire now, for more details please contact sales@marketnews.com

BRAZIL (BBG): Bolsonaro Sentenced to 27 Years in Prison for Plotting Coup

Brazil’s Supreme Court sentenced Jair Bolsonaro to 27 years and three months in prison for plotting a coup after his 2022 defeat, making him the first former president convicted of such a crime in a nation long scarred by successful and failed power grabs. Earlier on Thursday, four of the five justices on a panel overseeing the case voted in favor of Bolsonaro’s conviction on charges that he sought to stay in power by plotting a military coup that included plans to assassinate President Luiz Inacio Lula da Silva.

DATA

UK DATA (MNI): Monthly GDP Broadly In Line; Weak Manufacturing Balanced by Services

• UK JUL GDP +0% M/M, +0.2% 3M/3M, +1.2% 3M Y/Y
• UK JUL IND PROD -0.9% M/M, +0.1% Y/Y
• UK JUL MANUF OUTPUT -1.3% M/M, +0.2% Y/Y
• UK JUL SERVICES INDEX +0.1% M/M, +0.4% 3M/3M
• UK JUL TRADE BALANCE GBP -5.26BN

Monthly GDP broadly in line but with services a bit stronger than expected and IP softer (manufacturing in particular). It looks like health services might not have been hit by the doctor's strike as much as expected (as this category still grew in July) - and indeed this was the second largest contributor to services growth. Pharma products were one of the biggest downside contributions to manufacturing (not fully expected) while computer and electronics were also soft M/M. Overall, we would view the GDP print as mildly disappointing. Services largely surprised to the upside because of less strike impact while manufacturing was soft and shows more signs of a concerning persistent trend lower.

UK DATA (MNI): Inflation Expectations Pick Up Notably; A Major Concern for the MPC

This Bank of England/Ipsos Inflation Attitudes Survey is going to be a concern to the MPC. Expectations for the coming year up to 3.6% from 3.2% (in May) is a concern (for pay negotiations in particular). This is the highest since February 2023 and is influenced by spot inflation - but that is the BOE's concern as food inflation in particular continues to move higher. Expectations for the year after that expectations are up to 3.4% from 3.2% (again highest since Feb 2023) and in 5-years time at 3.8% from 3.6% (highest since Nov 2022).

UK DATA (MNI): UK's ONS to Refocus on Rolling 3-Month GDP Data

The Office for National Statistics will present its short-term GDP data with a three-month focus from September, pushing the monthly growth reading further into the release. “From today we are changing our presentation of GDP to lead with changes across three-month periods," ONS Director of Economic Statistics Liz McKeown said Friday. 

GERMANY DATA (MNI): Final German August Data Sees Food, Energy Upward Drivers

• GERMANY AUG FINAL HICP +2.1% Y/Y, +0.1% M/M
• GERMAN AUG FINAL CPI +2.2% Y/Y, +0.1% M/M

German final August HICP was unrevised from the flash readings at 2.1% Y/Y (1.8% prior) and 0.1% M/M. The final reading to CPI was also unrevised at 2.2% Y/Y (2.0% prior) and 0.1% M/M whilst core CPI printed at 2.7% Y/Y for the fourth consecutive month. The main conclusions from the flash reading were confirmed. Services remained at 3.1% Y/Y (as tracked after state-level data), the joint lowest rate since August 2022, with the contribution vs July unchanged. Goods inflation meanwhile accelerated, with a 0.17pp higher contribution to headline, mostly on the back of higher food and energy.

FRANCE DATA (MNI): French Inflation Pressures Remain Soft

• FRANCE AUG HICP +0.5% M/M, +0.8% Y/Y
• FRANCE AUG CPI +0.4% M/M, +0.9% Y/Y

French inflationary pressures remain soft. Final August HICP inflation confirmed flash estimates at 0.83% Y/Y (vs 0.94% prior), while CPI inflation was 0.88% Y/Y (vs 1.00% prior). Services inflation eased in August. A pullback in airfares (-0.04% Y/Y vs 7.66% prior) was offset by a rise in package holidays (8.78% Y/Y vs 1.88% prior), but other transport categories also decelerated relative to July. More "underlying" services components such as insurance also eased (but remain elevated). Trends in the likes of rents, medical services and catering services were steady.

SPAIN AUG HICP +0% M/M, +2.7% Y/Y (MNI)

CHINA JAN-AUG TSF CNY26.56 TRLN VS MEDIAN CNY26.53 TRLN (MNI)
CHINA JAN-AUG NEW LOANS CNY13.46 TRLN VS MEDIAN CNY13.57 TRLN (MNI)
CHINA END-AUG M2 +8.8% Y/Y VS MEDIAN +8.7%; END-JUL +8.8% Y/Y (MNI)

FOREX: JPY Softer as Takaichi Takes Top Spot in Polling

• JPY weakness stands out early Friday, with USD/JPY rallying through Y147.50 on the back of a Kyodo News report flagging that Thatcherite MP Takaichi is leading opinion polling to replace Ishiba as leader of the LDP and Japanese Prime Minister. Her pro-fiscal spending stance as well as her criticism of BoJ tightening plans have worked against the currency and any rally through yesterday's highs opens resistance into 148.58/149.14, the Sep 8/3 highs.
• The USD trades firmer against all others in G10, benefiting from a phase of equity sales alongside the European open. Weakness in stocks came on no headline or news trigger, although losses are just off yesterday's alltime highs - so may mimic profit-taking rather than any fundamental driver. The USD Index daily chart shows this rally is still contained below 97.944, the 50% retracement for the downleg posted off the early September highs.
• FX volumes are healthy: Z5 EUR futures have posted close to 30k contracts, while JPY futures are seeing notable interest: and already aren't far off meeting the cumulative total volume from Thursday.
• The single currency continues to trade well: the EUR holds yesterday's rally as markets see the first post-decision comments from governing council members. The trend theme in EURUSD remains bullish and the pair is trading closer to its recent highs. Resistance at 1.1743, the Aug 22 high, has recently been cleared reinforcing a bull cycle. This signals scope for 1.1829, the Jul 01 high and bull trigger.
• Focus for the duration of Friday trade shifts to prelim University of Michigan sentiment numbers, at which markets expect 1-year and 5-10-year inflation expectations to moderate to 4.8% and 3.4% respectively. The Fed remain inside their pre-meeting media blackout period, which should keep central bank speak quiet. 

EGBS: Bund Futures Testing Support; German Curve Bear Flattens

Bund futures are extending lower, now -42 ticks at 128.68 and testing support at the 20-day EMA. Clearance of this EMA would expose the Sep 4 low at 128.25. An extension higher in crude oil futures seems to be adding to existing pressure on core FI this morning. 

• Following yesterday’s cautious ECB press conference, the German curve has bear flattened. 5s30s is almost 5bps flatter at ~95bps, while 10s30s is 3.5bps flatter at ~56bps. We have seen plenty of activity in EGB and Euribor futures/options this morning, including a large (assumed) RX/UB flattener.
• ECB speakers have been out in force, but haven’t really moved the needle. Villeroy noted that “several of us [the GC], including myself, underlined the downward risks to inflation in the close future”, but other speakers were more in fitting with (if not slightly more hawkish than) President Lagarde’s press conference tones.
• 10-year EGB spreads to Bunds are within 0.5bps of yesterday’s closing levels (with the exception of OLOs, which are 1bp tighter to Bunds). Most focus is on the outcome of today’s after hours ratings decisions - most notably Fitch on France and Portugal. We expect France to be downgraded to A+ and Portugal to be upgraded to A.
• Final inflation readings from Germany, France and Spain confirmed flash signals. 

GILTS: Bear Flattening, Mostly Driven by Cross-Market Cues

Gilts look to a continuation of the post-ECB bear flattening in Bunds and a recovery from lows in crude oil futures in early London trade.

• Yields 1.0-2.5bp higher as a result, recent flattening theme extends.
• Gilt futures remain within yesterday’s range, just off session lows, -15 at 91.49.
• Bull cycle in the contract remains intact, support and resistance located at 90.65 & 91.82, respectively.
• Little reaction to a mostly in line round of UK GDP data, with soft manufacturing and industrial production outcomes balanced by the slightly-firmer-than-expected services side.
• Perhaps some background pressure stemming from BoE/TNS 1-Year inflation expectations hitting the highest level since August ’23 (3.56%), but the cross-market cues detailed above have been far more important.
• Modest hawkish repricing in the short end given the move further out the curve.
• SONIA futures flat to -2.5 through the blues.
• BoE-dated OIS shows 8.5bp of easing through year-end vs. 9.5bp early today, recent moves below 8bp have been limited, with that contract nearing the hawkish boundary of the recent range.

EQUITIES: Post-CPI Gains Reinforce Bullish Theme for E-Mini S&P

A corrective bear cycle in Eurostoxx 50 futures remains in play. Recent weakness resulted in a breach of 5369.48, the 50-day EMA. A clear break of this average strengthens a short-term bearish threat and signals scope for a deeper retracement towards 5166.00, the Aug 1 low and a key support. On the upside, the contract has recovered above the 20-day EMA - a bullish development for now. A stronger reversal would open 5445.00, Aug 26 high. A bull cycle in S&P E-Minis remains intact and Thursday’s gains reinforce current conditions. The contract has once again traded to a fresh cycle high. This confirms a resumption of the uptrend and maintains the bullish price sequence of higher highs and higher lows. Sights are on the 6600.00 handle where a break would strengthen the bull theme and open 6673.37, a Fibonacci projection. Initial support to watch is 6481.60, the 20-day EMA.

• Japan's NIKKEI closed higher by 395.62 pts or +0.89% at 44768.12 and the TOPIX ended 12.73 pts higher or +0.4% at 3160.49.
• Elsewhere, in China the SHANGHAI closed lower by 4.711 pts or -0.12% at 3870.598 and the HANG SENG ended 301.84 pts higher or +1.16% at 26388.16.
• Across Europe, Germany's DAX trades lower by 72.18 pts or -0.3% at 23631.21, FTSE 100 higher by 23.92 pts or +0.26% at 9321.38, CAC 40 down 40.44 pts or -0.52% at 7783.08 and Euro Stoxx 50 down 20.44 pts or -0.38% at 5366.33.
• Dow Jones mini down 96 pts or -0.21% at 46043, S&P 500 mini down 12 pts or -0.18% at 6580.75, NASDAQ mini down 21.5 pts or -0.09% at 23996.25.

Time: 10:00 BST

COMMODITIES: Gold Remains in a Clear Bull Cycle, Close to Fresh Record Highs

The trend condition in WTI futures is unchanged - a bear cycle remains intact and recent short-term gains are considered corrective. The pullback from the Sep 2 high highlights a possible reversal and the end of the corrective phase. Initial resistance to watch is $66.03, the Sep 2 high. Key short-term resistance has been defined at $69.36, the Jul 30 high. A stronger resumption of weakness would open $57.71, the May 30 low. Gold remains in a clear bull cycle and continues to trade at its recent highs. The yellow metal has traded to a fresh all-time high again this week. The break higher confirms a resumption of the primary uptrend and an extension of the sequence of higher highs and higher lows. The next objective is $3674.8, a Fibonacci projection. Initial firm support lies at $3504.1, the 20-day EMA.

• WTI Crude down $0.03 or -0.05% at $62.33
• Natural Gas down $0.03 or -0.85% at $2.909
• Gold spot up $7.1 or +0.2% at $3641.38
• Copper up $2.35 or +0.5% at $468.25
• Silver up $0.68 or +1.65% at $42.2305
• Platinum up $4.26 or +0.31% at $1387.89

Time: 10:00 BST

Date	GMT/Local	Impact	Country	Event
12/09/2025	1230/0830	*	CA	Building Permits
12/09/2025	1400/1000	*	US	Services Revenues
12/09/2025	1400/1000	***	US	U. Mich. Survey of Consumers
12/09/2025	1400/1000	**	US	University of Michigan Surveys of Consumers Inflation Expectation
12/09/2025	1600/1200	***	US	USDA Crop Estimates - WASDE
12/09/2025	1700/1300	**	US	Baker Hughes Rig Count Overview - Weekly
12/09/2025	1700/1300	**	US	Baker Hughes Rig Count Overview - Weekly